Dive Brief:
- ConAgra Foods, Inc. reported a net income loss of $952.7 million for Q3 after reporting positive net income of $236.9 million in the fiscal third quarter of 2014.
- Part of ConAgra's loss came from significantly lower profits from its private brands. However, the company expects those profits to gain in fiscal year 2016 and going forward.
- Despite the loss, the company's earnings per share beat Wall Street estimates of $0.53 per share at a reported $0.59 adjusted earnings per share. This encouraged ConAgra to up its expectations for full-year diluted earnings per share to $2.15 to $2.19.
Dive Insight:
ConAgra isn't the only processed foods company whose private brands are taking a hit. Other major processed foods companies are seeing the same issues as consumers move toward healthier, less-processed, and more natural and raw foods, away from the center of the store.
The company credits the loss to "a continued competitive bidding environment and execution shortfalls," according to its earnings press release, but it plans to implement execution initiatives to improve the brands' performance going into fiscal year 2016. These initiatives include moving more quickly to commercialize new items and fulfill customers' requests for product modifications as well as other internal factors, such as on-time deliveries and having a better alignment of the sales and supply chain. While these initiatives may help ConAgra's bottom line, will it be enough of an outward move to appeal to health-conscious consumers? It's hard to say, but ConAgra may be looking too inward to have a significant impact on future profits.
At this point, there's enough going on in the space that anything is possible.
Correction: Chef Boyardee saw sales growth for Q3.